Document background
The Irrevocable Letter of Guarantee is a crucial financial instrument in Indonesian banking and commercial practice, commonly used to secure various business obligations and transactions. It is typically required in situations where one party needs to provide financial security to another, such as in construction projects, tender submissions, advance payment security, or performance guarantees. The document creates a primary obligation on the issuing bank to pay upon demand, independent of the underlying transaction between the principal and beneficiary. Under Indonesian law, particularly the Banking Law and Civil Code, these guarantees must meet specific regulatory requirements and formatting standards. The instrument's irrevocable nature means it cannot be modified or cancelled without the beneficiary's consent, providing strong security for commercial transactions.
